JP
Morgan’s current credit derivative loss can be possibly interpreted as of the
tip of another iceberg! Greek exit fears is already hitting all the
markets, Indian Rupees are one of the lowest valued currencies in the world in
respect to the dollar. It’s inevitable that currency volatility today touches a
highest worry in India (Oil price goes up 10% last night), India’s Central Bank
took Steps to encourage inflows and curb any speculation. Spain and Italy bonds
surge and bank shares suffer and in this global persistence turmoil Dimon
shakes up JP Morgan risk appetites. It’s not a great day for
risk managers, because if things went as I imagine, this was possibly a
decent strategy that has been killed by a risk manager that did not understand
the model and went to Dimon screaming around like a headless chicken. I
must tell that the problem is possibly not even with their model(s), but with
the leverage employed in the strategy (LTCM has NOT taught anything?).

Edmond : In my opinion, this
is indeed a constraint on any calculation of econometrics and financial
engineering that relies heavily on mathematical formulas and statistics are
actually unable to be carefully and accurately calculate the various dynamics
of the real business of economic conditions and financial fund. So it should
always be revised, unfortunately also if not revised even calibrated to chance
the risk will happen in the future and continue to perform leveraging even
higher to cover the losses that have occurred. This is very strange because it
would increase the burden of risk has gone before. My blog has stated and
predicted that all risk management with mathematical risk models will still
always be wrong and harmful because it was inaccurate and wrong in predicting
the strains on biorhythmic and biocycle fluctuations in a linear growth
condition and prosperity. It will always have up and down of volatility and turbulencies on
dynamics economic conditions and the economic downturn.
Read my blog:

Today
portion arsing proportion of the institutional investors are no-longer going to
trust banks in risk measures and reliability of their models. So investors might finally become keener in
coordinating with regulators and follow their risk management policies.

Now regulatory bodies will try again (beyond
Basel III) to be heard with the minimum capital requirements.Edmond
comment :this
isalsoa lessfavored byGeorgeSoros, WarrenBuffetandPaulOrmerodagainstallpredictionsandthe directionofWallStreetinvestmentsee my blog: http://bioeconomicnatural.blogspot.com/2012/03/some-theory-of-predictions-that-not.html . Regulators so far try to guide markets
with the minimum capital models however they haven’t enough ability to
calculate on the effect of the various “hedging” strategies in their economic
capital models or bankruptcy protection risk mitigation methodologies. Even if
some regulators try to plug-in some good suggestions, banks couldn’t find
enough expertise to implement or match with their instruments, or worse,
resisted, knowing too well that risk control means less bonus money So banks
will rather walk on the “extreme narrow risky trail” of existence (example:
German bank pay cap is scrapped). Edmondcomment : read this blog to know how the real risk can affect financial
market risk in economic dynamic by biocycle dynamic which based on natural
power that not know by many economist and financial analyst http://bioeconomicnatural.blogspot.com/2012/03/opportunity-and-risk-in-business.html ; http://bioeconomicnatural.blogspot.com/2012/03/uncertainty-and-threat-for-business.html and http://fore-analysis.blogspot.com/2012/03/risk-management-method-of-trading-and.html especially for
investment risk management on below blog).Another big problem today is the correct
methodologies for valuation of assets and liabilities. For insurance companies
the valuation of the liabilities is one of the difficult issues. For the assets
one could use the principle “mark to market” (unless he holds skeletons in the
cupboards…then “hold to maturity” or “mark to fantasy” prevails as the
liabilities and also a big portion of the assets are not market traded.. Again
one can mimic the fair valuation of the market traded assets and transfer the
principle to the non-market traded assets and to the liabilities. The mark to
market causes extra volatility because of overreaction of the markets
(increased delta). Overreaction can cause bankruptcy without real reason. I
refer here to the Russian crisis period (1998) where the bonds of the European
countries (especially the Italian ones) got a big depreciation. The reason was
that it was believed (maybe wishfully believed) that the Italian Lira would drop
out of the pre-Euro agreement. The convergence of the interest rates would
thereby stop Edmond Comment
: read http://bioeco-ronmentblogspotcom.blogspot.com/2012/03/zero-interest-rate-effect-on-potential.html ). This was clearly an
overreaction induced by speculation and without looking at the economic and
political reality (http://fore-analysis.blogspot.com/2012/03/aspect-of-psychological-mass-on.html). At that time “Long
Term Capital Management” had to be rescued. Maybe the rescuers did a good deal.
In a recent crisis, the Swiss government bought bad parts of the UBS-portfolio,
helping UBS to overcome its capital needs. These assets were so lowly priced
that there was a discrepancy between the liabilities and the assets. UBS was
almost bankrupt. Today the markets have positively reacted and as a result the
Swiss Government made money on these assets! In a discussion with a banker, we
were told that the mark to market causes volatility that could come from pure
speculation and this influences the equity in a leveraged way (read my blog http://bioeco-ronmentblogspotcom.blogspot.com/2012/03/why-lehman-brothers-is-not-realized.html on leveraging to get
more gain with minimized the risk on financial engineering). We heard
that also on the liability side, some accountants advocate that one could use a
valuation that puts in the default probability. But these suggestions sounds
also a bit biased by conflicts of interests…the banker’s ones particularly.In plain
English it would mean that a company could get a huge benefit and hence a good
bonus simply because it is downgraded. This is almost criminal activity. We
learnt that the mark to market practice is now criticised by some accountants
and specialists. We wonder what are the real motivations behind these
criticisms.Finally, we all know that when you cooking with
junk ingredients it is difficult to get a good meal. It can look nice but if
the ingredients were rotten, one should not eat it (Edmond comment :
according to me that or the term"GarbageInGarbageOut" is
if thedata
isgarbagethen the resultwill begarbage), it
will be difficulttogeta healthyanddeliciouscuisine. It
canlook
good(the wrapper is
verybeautifulwitha variety offancy, so
in addition togivingeffectalsoamazedat the same timeconfusingthe layman). The same for CDO. The rating agencies failed when they gave AAA
ratings to junk. And this practice triggered extra risk taking since one could
get rid of the bad things from his own books by securitising them and selling
them.. The regulators also failed but maybe they had an excuse because they
were asked to believe the ”mark to model” fantasies…and failed to scrutinise
them closely.. Let me close this with the following – if the
practice of using risk measures goes on, we never can get rid with the crisis
or recession followed by double and triple dip. And accordingly possibly all
institutional investors would face insecurity with their investments and
unforeseen surprise of the return as well.Edmond comment
: stranger indeed bigger bank owners grew bolder, as before Indonesia economic crisis
of 1997/1998. Besides the bailout fund and also unwilling to pay its debts
because it was unable to return the debt and mortgage due to third party fund
given to its affiliates without consideration of the feasibility and credit
risk. It also occurs in develop countries are the US, Europe and Japan who are
experiencing debt crisis and recession induced bank, especially in investment
banking business junk bond derivatives that received a huge bailout but many
small and middle banks are liquidated (400 banks in U.S. since 2009). So should
we look at what actually happened in the U.S., Europe and in Asia (Indonesia)
at the time before the 1997 crisis is still ongoing. Actually Governor Ben
Bernanke is afraid of the effects of deflation by lowering FFRT to 0.25%, but really he will dig a hole of Deflatoir and pressing real sectors. With this zero rate can be trigger on speculations by Carry Trade actions to enter the financial market (this is make financial market rally and commodity price being booster to make high inflation in consumption but make a real deflatoir condition on real sector by highest price on raw material to make a effientcies products and absorp the high unemployment rate. So that he is
always keeping the Quantitative Easing (QE 1-2) and later followed QE3 and the banks who are not helping
the real sector and SMEs. Yes obviously banking sector will go into speculative
and consumptive but not encourage and strengthening the real sector with a result of fragile growth
economy, unemployment remains high, purchasing power is low and property
prices continue to fall. A recipe with this aspirin is less potent in the longterm, but just only a
model of viagra or ecstasy that will make the body economy the U.S., Europe and
Japan more a little strong in shorterm on how to cure the crisis and recession with recipes using only fiscal
stimuli and monetary policy on zero rate, quantitative easing by printing
money amd increased lending but no good effect. And finally in longterm that make more weak with much more deseases in economic body to be more fragile and weak to be recession (Double and Tripple Dip Recession) and tend to be more falling in long Deflation period.This model does
give rise to short-term high inflation, but in the long run it to created
deflatoir effects feared by the Central Bank (http://bioeco-ronmentblogspotcom.blogspot.com/2012/03/zero-interest-rate-effect-on-potential.html).
This will make the economy more vulnerable to diseases of the body in the long
run, economic growth remained low in the unemployment rate remains high and
purchasing power remains low in consumption and real estate, and finally into
the abyss of an acute deflation in the Great Depression deflatoir.Also read my
blog : 1. Utilization
of Econobusiness Biocycle Dynamic or Bio-Economic Natural on Corporate Business
Planning in order to prevent a variety of business risk and market fluctuation
with to know how this strains http://bioeconomicnatural.blogspot.com/2012/03/utilization-of-econobusiness-biocycle_22.html

Fluctuations in short-term (daily and weekly) will occur naturally
influenced by state of mentality, passion, taste, motivation of global mass
psychology to take trading positions in a market that is crowded and often
chaotic. If there is data or news that very fundamental economic conditions,
business and politics, fluctuations in stock price movements will occur
dynamically and both meteoric and volatile free fall in excess of the daily forecast.
But in the medium and long-term investment will be influenced dynamically by
biocycle and biorhytmic of legal and natural forces are always moving up and
down dynamically. So you not only have to Globalization with Globalnet (internet system)
but also now should have a vision in a way Galaxization with Galaxinet * *
(Astronomical).

Where
we can know the strains and the condition of the Universe Kingdom
in the short term (10 years), medium term of 50 years and long term
100-200
years), which will also be evident in a "Certainty of Life rather than
Uncertainty Life " who always complained of many
parties, including the leaders of the state policy makers, leaders of
business
policy (industrialists and traders) as well as experts in various fields
of
life. The power and influence of Natural, Galaxy and Universe Law
(Universe Kingdom / Source One in Central Sun Universe) this will
always
affect every aspect of our lives on this planet, either consciously or
unconsciously to anticipate properly.

About Me

I am a Fishery Biologist and have an MBA in Industrial Management with experiences in Forex, Stocks and Commodity since 1997. My vision is midterm and longterm for investment driven and shortterm trading. This support with experiences in Socioeconomic & Land Mapping Survey and Region Planning Report, so that I have Long Vision in Biocycle Dynamic Mechanism on Human Life Activities, include Econobusiness Biocycle Dynamic or Natural Bio-Economic that based on Natural Law Driven.This method can be accurate and finely to know and predicted on Economic, Business, Technology, Social, Politic and Life Environment whats going on in the Future (midterm 1 - 5 years and longterm 5 - 25 years)